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UBS beat analysts’ forecasts with a 19% rise in quarterly profit, thanks to the strong performance of its trading division.
The world’s largest wealth manager reported first-quarter net profit of $2.7 billion on Tuesday, well ahead of the $2.4 billion forecast by analysts.
Profits at the Swiss lender’s investment bank more than doubled from the first quarter of last year, when it lost $774 million following the collapse of family office Archegos.
The bank benefited in the first quarter of 2022 from a 59% increase in revenue from its trading division thanks to strong performances in equity derivatives, interest rates and foreign exchange.
But UBS’s wealth management business was hit by a 7% drop in revenue compared to the same period last year, with the group saying transaction-based revenue fell 19%, customers, especially in Asia, transacting less.
“The first quarter was dominated by extraordinary geopolitical and macroeconomic events,” said Ralph Hamers, chief executive. “Against this backdrop, we remained focused on executing our strategic plans, serving our customers and managing risk.”
Citigroup analysts expected UBS to be the best-performing European investment bank this season, with the lender enjoying higher earnings in its global markets division, which focuses on equities and currencies.
In the days following Russia’s invasion of Ukraine, UBS disclosed that it had $10 million in outstanding loans from clients hit by Western sanctions. It also said it has about $200 million in exposure to Russian assets used as collateral in Lombard loans and $634 million in direct country risk exposure.
UBS announced on Tuesday that it has reduced its direct risk exposure with Russia by a third, to around $400 million.
He added that EU and Swiss rules prohibiting accepting deposits of more than 100,000 euros from Russians not allowed to live in the European Economic Area affected 0.7% of his assets. wealth management division.
The lender’s share price has been stable this year after recovering from a 28% plunge at the start of the war in Ukraine.